Mining Explorers 2016: Unlocking NWT's potential

Diamonds, such as these from the Ekati Mine, will dominate the mining scene in Northwest Territories for the foreseeable future.

While most mining jurisdictions have seen sharp drops in mineral exploration spending, such investments in Northwest Territories has largely held steady at about C$100 million annually during the past five years. As a result, this diamond-rich territory accounted for roughly 7 percent of mineral exploration spending in Canada in 2016, compared with only about 2 percent in 2011.

The ultimate measure of mineral exploration success is not the amount of exploration dollars spent each year, but whether that investment results in discoveries of viable mines. Three successful operations in Northwest Territories – Diavik, Ekati and Snap Lake – produced 10.95 million carats of diamonds valued at roughly C$1.73 billion in 2015.

"The mining sector is the single-largest private sector employer in the NWT and contributes more than a billion dollars to the territory's GDP annually," said Northwest Territories Premier Robert McLeod.

Mining's healthy contribution to the Northwest Territories economy traces its roots to the relentless pursuit by prospector Charles Fipke, who discovered diamonds near Lac de Gras in 1991.

"This year, our diamond mines surpassed $50 billion in total mineral value produced in these 25 years," said McLeod.

Not resting on its laurels, the Northwest Territories government has a number of programs aimed at ensuring mining continues to provide a solid foundation for its economy going into the future:

• Mining Incentive Program, which provides C$400,000 in funding each year to prospectors and companies for mineral exploration in the territory;

• Assessment Work Incentive, a two-year program that increases the exploration credit applied to mineral claim assessments by 50 percent; and

• Unlocking Our Potential, an increased marketing and promotional campaign to attract additional private sector investment to mineral exploration and development in the territory.

"The Government of the Northwest Territories recognizes that maintaining the health of the sector is crucial for the well-being of NWT residents and the strength of the territorial economy, particularly as we face fiscal challenges at home and a difficult economic climate internationally," explained McLeod.

Diamonds dominate

Like all of Canada's North, Northwest Territories is rich in a wide array of metals and minerals. Diamonds, however, will continue to dominate the mining scene in Northwest Territories for the foreseeable future.

Canada is the world's third-largest diamond-producing nation by value, of which 81 percent are mined in Northwest Territories.

"It's encouraging to see that we maintained our high value of (diamond) production last year despite challenging market conditions," NWT and Nunavut Chamber of Mines President Gary Vivian said in late June.

The suspension of operations at De Beers Canada's Snap Lake mine late in 2015 and a June fire temporarily knocking the Ekati processing plant out of operation is expected to deal a blow to Northwest Territories diamond output for 2016.

"The unexpected closure of the Snap Lake mine and the Ekati mine fire are going to affect 2016 figures, and we are really looking forward to the opening of the NWT's newest diamond mine, Gahcho Kué in the coming months," added Vivian.

Despite the fire, recent developments at Ekati are encouraging for the future of the mine and diamond production in Northwest Territories.

In late April, Dominion Diamond Corp., which operates and owns majority interest in Ekati, reported that its share of the reserves at Ekati was 110.8 million carats of diamonds, enough to keep the mine in operation into 2033.

As the company gears up to begin developing Jay, where the majority of these reserves are located, the company is continuing its search for other deposits that will extend the mine beyond 2033. The work includes expanding upon the 35.2 million metric tons of indicated resources averaging 0.3 carats per metric ton (9.8 million carats) diamonds identified below the previously mined Fox pit. With hopes of identifying higher grade material below this resource, drilling collected a 925-metric-ton sample from the underground target early in 2016.

In late September, the processing plant at Ekati was brought back online. Dominion said the cost to repair the facility was roughly US$15 million.

Dominion also owns a 40 percent stake in the Diavik Mine. In 2014, Rio Tinto plc, which holds the other 60 percent interest in the mine, approved development of A-21, a kimberlite pipe with 10 million carats of diamonds. Slated to begin production in 2018, A-21 is currently expected to contribute to Diavik's diamond output for six years.

This year's ramp-up operations at the Gahcho Kué diamond mine, a joint venture between De Beers Canada (51 percent) and Mountain Province Diamonds' (49 percent), was a passing of the torch of sorts.

Keeping a staff of roughly 120 workers for environmental monitoring and other care and maintenance tasks at recently shuttered Snap Lake Mine, De Beers transferred much of the remaining seasoned workers to Gahcho Kué, a new operation about 80 kilometers (50 miles) to the east.

In the months following the transfer, Gahcho Kué steadily checked off milestones on its way to commercial production.

"Successful plant commissioning and the start of ramp-up to production at the world's largest new diamond mine is a major achievement for the Gahcho Kué joint venture and a tribute to the operating partner De Beers Canada," Mountain Province President and CEO Patrick Evans.

Even before the official opening of Gahcho Kué in September, two large gem-quality diamonds, a 12.1-carat diamond and a 24.65-carat stone, has been recovered from Northwest Territories' newest diamond mine.

Gahcho Kué is anticipated to produce 53.4 million carats of diamonds over a 12-year mine-life, according to a 2014 feasibility study.

On the horizon

Northwest Territories' next diamond mine may be on the horizon, both literally and figuratively, from Gahcho Kué.

Kennady's exploration on its namesake project has focused on building a resource along the Kelvin-Faraday kimberlite corridor, a region of the property that trends northeast from Gahcho Kué and hosts Kelvin and Faraday kimberlite bodies. The company hopes to establish a resource along this corridor of 13 million to 16 million metric tons of kimberlite averaging upwards of 2.5 carats per ton.

After spending the last couple of years expanding Kelvin, this year's exploration focused on exploring three kimberlites at Faraday, which is located about 2,500 meters to the northeast of the more advanced kimberlite body.

"Our systematic approach to expanding the Faraday bodies is exactly the same as that which expanded Kelvin to its present size. We have no doubt that as we continue additional kimberlite will be discovered with this exploration," said Kennady Diamonds President and CEO Rory Moore.

Kennady plans to have a preliminary economic assessment prepared for its namesake project by the end of 2016 and, if things continue to look good, initiate a feasibility study for building Northwest Territories next diamond mine at Kennady North in 2017.

Canterra Minerals Corp., one of the five exploration companies to receive a Northwest Territories Mineral Incentive Program grant, is focused on diamond exploration in the area between and around the Snap Lake and Gahcho Kué mines.

The C$34,575 grant Canterra received from the incentive program went towards exploration of Prism, a diamond prospective property located about 25 kilometers (16 miles) south of Snap Lake.

In June, Canterra reported the acquisition of CL-25, a single claim that hosts two kimberlite pipes. Located about 30 kilometers (19 miles) east of Snap Lake, CL-25 is surrounded by claims that make up the company's larger Gwen property.

"CL-25 will be one of our primary target(s) for exploration over the next year, and we look forward to advancing it," said Canterra President and CEO Randy Turner.

Proxima Diamonds Corp., another incentive program grant recipient, is private diamond explorer that invested roughly C$300,000 on the continued exploration of Northwest Territories diamond properties in 2016, including three high-priority targets between Snap Lake and Gahcho Kué, and four surrounding the Ekati and Diavik mines in the Lac de Gras region.

North Arrow Minerals Inc., which received a C$66,000 grant, completed a 28-hole drill program at Redemption, a diamond project located in the Lac de Gras district about 32 kilometers (20 miles) southwest of the Ekati Mine.

North Arrow also holds a joint venture interest in the aptly named Lac de Gras property, which is located about 20 kilometers (12.5 miles) southwest of the Diavik Mine. Dominion, North Arrow's Lac de Gras JV partner, approved a C$1.3 million exploration budget for the project in 2016. This program included data compilation, airborne geophysical surveys and groundwork.

Panarc Resources, a privately held prospect generator associated with Aurora Geosciences Ltd., was another company that leveraged funds provided via the Northwest Territories Mineral Incentive Program to explore for diamonds in the territory.

Golden legacy

Before diamonds were discovered in Northwest Territories, the historic Con and Giant mines churned out roughly 14.2 million ounces of gold near the capital city of Yellowknife.

Today, TerraX Minerals Inc. is reviving this legacy with an exploration program that is uncovering a multimillion-ounce gold camp at its Yellowknife City Gold Project, a 118-square-kilometer (45.5 square miles) land package that extends both north and south from the capital city.

"The Yellowknife gold district was historically one of the highest grade gold districts in Canada, and our exploration results have shown that the district has much more to offer," said TerraX President Joe Campbell. "Until TerraX's recent consolidation of the district, it had not been explored with a district-scale coordinated program using modern techniques. This fresh approach has resulted in a number of new high-grade gold discoveries, and we expect to continue to find more of the same this year."

To date, most of the company's exploration success has been along the "core gold area" of the Northbelt property, which extends north from Yellowknife and the historic mines. TerraX says the six veins and shear zones it has discovered along this 10-kilometer- (six miles) long core area – Mispickel, Sam Otto, Barney, Herbert-Brent; 20 Shear and Crestaurum – are indicative of a larger mineralized system.

Discovery drilling at Mispickel during a winter 2016 program cut 8.6 meters averaging 12.87 g/t gold and 7.3 meters of 23.6 g/t gold. Encouraged by these results, the company drilled five more holes at Mispickel at the end of the winter program. The best intercept of this second round of drilling encountered eight meters of 60.6 g/t gold down dip on the same section as the discovery.

In July, TerraX reported the start of a 27,000-meter drill program to be undertaken at the Yellowknife project over an 18-month span.

This drilling will be a combination of extension drilling on known mineralized zones such as Mispickel; aggressive step-out holes along the structures hosting known zones, such as a 5,000-meter trend hosting Mispickel; and drilling focused on generating new discoveries.

This year, Silver Range Resources Ltd. acquired full ownership of seven gold properties, including the Up Town gold project about five kilometers (three miles) northwest of Yellowknife, from Panarc Resources. As part of the deal, which involved the issuance of 10 million shares, Panarc President Mike Power took over as the new president and CEO of Silver Range.

This deal signaled a transition away from Silver Range's focus on exploring for silver – zinc deposits in the Yukon to a project generative business model targeting gold projects.

True to this model, Silver Range completed a program of mapping, prospecting and geophysical surveys at Uptown Gold prior to optioning the property to Rover Metals Corp. in August.

In 2013, Nighthawk reported an inferred mineral resource estimate for Indin Lake of 39.8 million metric tons averaging 1.64 grams per metric ton (2.1 million ounces) gold. Roughly 2 million ounces of this gold resource is found at Colomac and Goldcrest, parallel trends on the property.

More than half of this year's drill program targeted Colomac, with the balance targeting the main resource area at Goldcrest and Goldcrest North, an isolated zone of near-surface mineralization located about 600 meters to the northeast.

Lithium-bearing pegmatites

While diamonds and gold glimmered in 2016, pegmatites with lithium and an array of associated technology metals are growing targets for Northwest Territories explorers.

The potential of lithium-bearing pegmatites within the Yellowknife area was first recognized in the mid-1950s. In addition to the lithium mineral, spodumene, these pegmatites in Northwest Territories are known to host other specialty-metals such as tin, beryllium, tantalum and niobium.

Despite the introduction of low-cost production from lithium brine deposits, 92 Resources said spodumene-bearing pegmatites continue to be an important supply of lithium, and this hard-rock source is expected to grow with demand for the technology metal.

Five samples collected during an initial phase of 2016 exploration at Hidden Lake returned an average grade of 2.54 percent lithium oxide. Additional sampling and mapping were carried out during a second phase of exploration that began in August.

The Li property, which Equitorial acquired from Strategic Metals Ltd., is located in western Northwest Territories, adjacent to the Yukon border. The Li property hosts the Little Nahanni Pegmatite Group, a swarm of lithium-cesium-tantalum pegmatite dykes.

Prior to selling Li, Strategic completed a two-week program of mapping, prospecting and channel sampling designed to evaluate grade, size and density of lithium-bearing pegmatite dykes within four of the dyke swarms on the property.

Big Bird has been mapped over a 1,280-meter strike length with observable outcrop widths ranging from eight meters to greater than 80 meters. Past drilling at Big Bird returned 1.24 percent lithium oxide over 34.3 meters. The Curlew pegmatite has been mapped over a strike length of 400 meters with widths up to 20 meters. Past drilling at Curlew returned 1.72 percent lithium oxide over 14.87 meters.

Coming cobalt, zinc mines?

While it is early days for Northwest Territories' lithium prospects, two projects hoping to supply the world with technology, base and precious metals are much further advanced.

Fortune Minerals Ltd. is seeking ways to fund development of its Nico gold-cobalt-bismuth-copper project in Northwest Territories.

Nico hosts 33 million metric tons of reserves, which is enough to support a 21-year mine that produces 41,300 oz. of gold, 1,615 metric of cobalt, 1,750 metric tons of bismuth and 265 metric of copper annually.

Fortune plans to develop Nico as a vertically integrated project complete with a mine and concentrator in the Northwest Territories and refinery in Saskatchewan.

While gold is currently the dominant metal at Nico, cobalt is a close second.

Driven primarily by cobalt's use in lithium-ion rechargeable batteries, the market for this technology metal has grown significantly over the past two decades.

Former Northwest Territories Minister David Ramsay, who joined Fortune's board of directors in April, said, "Having a reliable Canadian solution to the impending supply deficit for cobalt will be critical to global electronics companies that need cobalt to make lithium-ion batteries used to power portable electronic devices, electric vehicles and stationary storage cells."

Fortune, which has the permits needed to develop a mine at Nico, is working on options for financing the construction of this Northwest Territories operation.

In January, Fortune delivered a battery-grade cobalt sulfate produced from concentrates originating from Nico to a potential customer.

Canadian Zinc Corp. is closing in on developing its Prairie Creek zinc-lead silver mine in Northwest Territories.

In March, the company published results from an updated preliminary feasibility study for the pending mine.

The 2016 PFS outlines a mine that would produce an average of 60,000 metric tons of zinc concentrate and 55,000 metric tons of lead concentrate per year – containing roughly 86 million pounds of zinc, 82 million lb. of lead and 1.7 million ounces of silver.

While first production at Prairie Creek is likely still a couple of years away, some of the world's top zinc smelters are lining up for concentrates from the future Northwest Territories mine.

Korea Zinc, the world's largest zinc smelter, and Boliden, which has five smelters in northern Europe, have signed memorandums of understanding with Canadian Zinc for the offtake and sale of 40,000 to 70,000 metric tons of zinc concentrates and 20,000 to 25,000 metric tons of lead concentrates from Prairie Creek per year.

"These offtake arrangements with two of the pre-eminent smelting companies in the world, confirming the marketability of Prairie Creek's zinc and lead concentrates, represent a major step forward in the development of the Prairie Creek Mine and move Canadian Zinc closer to production," said Canadian Zinc Chairman and CEO John Kearney.

It also is a step towards adding zinc, lead and silver to the value of Northwest Territories' burgeoning mining sector.